Navigating The Uncertainty: Valuing Non-Competition Agreements For Internal Revenue Code Section 280G Purposes

In the dynamic landscape of mergers and acquisitions (M&As), M&A attorneys specializing in employee compensation and benefits must continue to be vigilant in keeping current with the evolving legal frameworks affecting their practice. A recent focal point has been the Federal Trade Commission's (FTC) ban on non-competition agreements within the United States, the subsequent court ruling that restricted the FTC ban, and the FTC's appeal of that ruling. These developments have profound implications for current and future transactions, particularly when contemplating the inclusion of the fair market value of a non-competition agreement as part of the calculation of golden parachute payments under Section 280G of the Internal Revenue Code.